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Dynavax Technologies Corporation (NASDAQ:DVAX)

June 10, 2013 9:00 am ET

Executives

Jennifer Lew - Vice President of Finance and Principal Accounting Officer

Eddie Gray - Chief Executive Officer and Director

Analysts

Philip Nadeau - Cowen and Company, LLC, Research Division

Thomas Wei - Jefferies & Company, Inc., Research Division

Liisa A. Bayko - JMP Securities LLC, Research Division

Operator

Good day, everyone, and welcome to the Dynavax Conference Call. This call is being recorded. At this time, for opening remarks and introductions, I would like to turn the call over to Jennifer Lew, Dynavax's Vice President of Finance. Ms. Lew, please go ahead.

Jennifer Lew

Good morning. I'm Jennifer Lew, Vice President of Finance, and I'd like to thank you for joining us. Participating with me on the call today are Eddie Gray, CEO; and Michael Ostrach, Vice President and Chief Business Officer.

Before discussing today's topics, we need to advise that we will use forward-looking statements that are subject to a number of risks and uncertainties. Actual results may differ materially due to the risks and uncertainties inherent in our business. Examples of these forward-looking statements include, but are not limited to, the company's plans to respond to FDA's feedback regarding the BLA for HEPLISAV; the resources planned to be devoted to the BLA for HEPLISAV and the FDA Complete Response Letter; the sufficiency of data to be submitted to FDA; the timing and potential outcome of data-generating activities; regulatory submissions and decisions by the FDA on the BLA for HEPLISAV; and other difficulties or delays in clinical development, manufacturing, regulatory approval, market acceptance and commercialization of HEPLISAV. These forward-looking statements are based on the information available to us today. We may not actually achieve the plan, carry out our intentions or meet the expectations disclosed in our forward-looking statements, and you should not place undue reliance on our forward-looking statements.

Actual results or events could differ materially. We assume no obligation to update these statements as circumstances change, except as required by law. For additional information, please see the Forward-looking Statement section in today's press release and the Risk Factors section of our quarterly report on Form 10-Q. I'd now like to turn the call over to Eddie Gray, our CEO.

Eddie Gray

Thanks, Jennifer. Good morning. I'm pleased to be here with you this morning to provide an update on our recent meeting with the FDA regarding HEPLISAV. Our comments on this call will be based on our current understanding of the issues and the steps that may be necessary to address them. Please bear in mind that we've only just met with the FDA a couple of days ago.

In my view, the outcome of the meeting was clear and followed, I think, predictably the themes expressed by VRBPAC last November. As we disclosed in the press release issued today, the main conclusions can be summarized as follows: Firstly, there was a strong endorsement for HEPLISAV's immunogenicity data demonstrated in previous clinical trials. In that context, the spirits and the tone of the interactions with the FDA suggest to us of their support for HEPLISAV's path forward to approval. Secondly, there was an acknowledgment that our safety database needs additional patients to support approval for any indication. Because HEPLISAV contains a novel adjuvant, we will need to increase the number of patients valuable for safety. Although we did discuss with FDA HEPLISAV's use in discrete patient populations, focusing on the improved benefit risk profile of the product in these groups, this approach did not address the fundamental issue of a shortfall in the safety database. Furthermore, our discussions suggest this would have necessarily restrict the patient population that could benefit from HEPLISAV's approval.

At this point, we are aligned with the FDA and understand the rationale for their recommendations. We remain optimistic that obtaining the additional safety data will facilitate FDA's review for an indication in adults 18 to 70 years old.

FDA has shown a continued interest in our adjuvant. If we can support competence in the safety of HEPLISAV, our efforts will underline the value of the adjuvant, and in many respects, serve to validate the underlying technology. And we believe that FDA reasonably understands that a safety study designed to include, say, 30,000 patients is not economically feasible for a small company like Dynavax. However, obtaining additional safety data at a scale roughly consistent with that discussed by VRBPAC is possible, and we intend to provide the FDA with further reassurance and greater insight.

We have started to work diligently on our proposed protocol. Whilst we cannot provide you with the specifics of this study today in terms of start date, duration or cost, we will continue our discussions with FDA and provide you with an update as soon as practicable.

Certainly, we're encouraged by FDA's continued support for HEPLISAV in a broader indication. Our challenge now is to manage the risks of ongoing development and the funding required. Employing financial discipline will be important as we determine time lines of incremental costs to finish this development.

In closing, let me also take a moment to remind you that our Marketing Authorization Application is under review by the EMA. We continue to pursue HEPLISAV's approval and commercialization in Europe. This concludes our prepared remarks.

Operator, you may now open the call to questions. Thank you.

Question-and-Answer Session

Operator

[Operator Instructions] Our first question comes from Phil Nadeau from Cowen and Company.

Philip Nadeau - Cowen and Company, LLC, Research Division

Just a couple. I'm trying to get maybe a bit more detail. So on the safety data that you're required to collect, did the FDA give you any sense of what power they're looking for in the database, so what ability to detect what type of rare adverse events? Was it just simply the patient numbers?

Eddie Gray

Thanks, Phil. Yes, it was simply patient numbers. As I think I indicated in my remarks, they moved away from the sort of numbers, which indicated that they were thinking along the detection calculation, and we're really talking about absolute numbers to provide additional competence consistent with the VRBPAC discussion.

Philip Nadeau - Cowen and Company, LLC, Research Division

Okay, great. And then second, do you have a sense of how long are you going to need to collect safety data in this trial? Could it be a 60-day type endpoint? Or do you think you need to take these patients at -- for 6 months or a year?

Eddie Gray

I think we're in the process of putting together that protocol. I think it would be fair to say we don't think it's going to be 60 days follow-up. But beyond that will be subjective discussion with FDA.

Philip Nadeau - Cowen and Company, LLC, Research Division

Okay. And then third, I know you've just said you can't answer this one, but I'll ask it anyway. Could you give us some sense of the cost of the study? Are we talking $100 million here, $50 million, $150 million? Just -- it can be a very wide range, but it's a very common question we're getting at this point.

Eddie Gray

Yes. I think you got it right off first time there, Phil. I'm really not in the position to answer that question just yet. But as soon as we get to that point, then we will share it.

Philip Nadeau - Cowen and Company, LLC, Research Division

Okay, and last question. On the EU, you did -- just did provide a very brief update. But can you give us a bit more of a sense of the feedback that you've gotten from the EU thus far? Any major -- have you had any major objections from the European regulators, and do you have a sense whether CHMP might take up a formal recommendation?

Eddie Gray

We are currently in the EMA standard process. We have not moved out of that standard process. We have received their 120-day questions. There are a number of them, ranging over a series of areas, and we're in the process of putting together our answers.

Operator

Our next question comes from Geoff Meacham of JPMorgan.

Unknown Analyst

Actually, Mike, in for Jeff. Regarding the safety study, I know you kind of commented 30,000 seems like a lot of patients. Can you maybe give us the sense of like a smaller range of where you might think that might shake out?

Eddie Gray

So the -- it really isn't possible to be specific today. I do apologize. I realized, I'm probably going that say that you sound a bit like a cracked record on some of these questions. I think if you go back to the VRBPAC discussions, you'll notice that there were a couple of different conversations there about what sort of database the VRBPAC was seeking to give them the sort of confidence that was necessary. And at the moment, we're concentrating our conversations with the FDA on the VRBPAC discussions.

Unknown Analyst

Got it. And then maybe a follow-up. In terms of CKG, for example, sort of what's the status on filing there? Is it -- because now, it seems like that's kind of off the table until you kind of get the safety database.

Eddie Gray

The safety database is undoubtedly our #1 objective at this point in time. I think you'll notice from our press release and my comments this morning, that the idea of trying to seek out patient populations where the -- we improve the risk benefit profile fail to sort of carry the maths in answering the basic question. I have to say our initial thoughts are that if we're going to answer the basic question, then we're going to be more interested, as it appears to the FDA in seeking the broader indication rather than using the study to then seek restricted populations.

Operator

Our next question comes from Thomas Wei of Jefferies.

Thomas Wei - Jefferies & Company, Inc., Research Division

Just to drill down a little bit further on what the VRBPAC had mentioned at different points in time. If I remember correctly, were they talking about a number around 10,000 total exposed HEPLISAV patients?

Eddie Gray

Different phraseology, which was used by different members of VRBPAC. I have to go back and check specifically, but I think my recollection may be similar to yours in terms of one individual talking about such a range.

Thomas Wei - Jefferies & Company, Inc., Research Division

And can you just remind us, how many patients do you have right now who have been exposed to HEPLISAV?

Eddie Gray

Our current number is about 3,500.

Thomas Wei - Jefferies & Company, Inc., Research Division

And you had said that a study of the scale that VRBPAC was discussing would be feasible, but you didn't actually say that, that's actually how the -- you and the FDA were -- you didn't mention that, that's actually how the FDA was thinking about it. Could you just clarify that? Certainly, it sounds like it's a feasible study for you to do. But is that in the range of where the FDA discussions were leading towards?

Eddie Gray

I'm sorry, you lost me slightly with that question. Could you just ask me that one again?

Thomas Wei - Jefferies & Company, Inc., Research Division

In the prepared comments, you had said that a study of this scale, that VRBPAC was discussing, is feasible for you to do, not the 30,000 patients. Then, you said that the FDA understands that. But you didn't actually say that, that's what the FDA wants to see, is a study of this scale that VRBPAC was discussing. Are they -- and so, I just wanted to clarify, is it both feasible for you and you think that, that would satisfy what the FDA is asking for?

Eddie Gray

Okay. So satisfaction with study design is obviously a function of many things. So it's fair to say that our discussions with the FDA were not inconsistent with the VRBPAC discussions. But clearly, they are not going to express satisfaction to us until they see protocols and understand all the relevance of its design. But that was the conversation, yes.

Thomas Wei - Jefferies & Company, Inc., Research Division

And how long do you think it will take you to negotiate a trial design with the agency? And should we assume this is a single-armed study? Or would you run it head-to-head versus Engerix?

Eddie Gray

So I don't think you should make any assumptions about the study design right now. And clearly, engaging or reengaging with the FDA on these discussions is our #1 priority. I shouldn't put words in FDA's mouth at all. But I would say is that the tone and interaction of the meeting suggests that they will be very responsive to wanting to discuss things with them quickly.

Operator

Our next question comes from Katherine Xu of William Blair.

Unknown Analyst

This is Alf Dylan [ph] for Katherine. Could you provide us a little bit additional information regarding the EMA and the MAA. Were they seeking additional information with regards to what was going to come out with the FDA discussions?

Eddie Gray

We've not heard anything from EMA making reference to FDA conversations.

Unknown Analyst

Okay. And beyond negotiating with the FDA in terms of an additional study, will -- after you initiate the proposal on the study, will focus kind of be shifted back into the pipeline a little bit in trying to develop some of the candidates you have there?

Eddie Gray

You'll recognize that I'm in my fourth week here. And clearly, the clarity and focus and articulation of our strategy going forward is a key objective for me. I'm going to ask you for just a little breathing space until I can kind of assimilate last week's meeting with the FDA, but also engage the management team and the board here in the articulation of that strategy before taking it live. Thanks.

Operator

Our next question comes from Liisa Bayko of JMP Securities.

Liisa A. Bayko - JMP Securities LLC, Research Division

I was wondering, just to derive some context on some benchmarks, could you maybe review the size of your Phase III studies and what the cost and time lines were for those?

Eddie Gray

So the last Phase III study was in the order of 2,500 patients, about $20 million, $25 million, and took about 2 years. All those numbers are sort of approximate.

Liisa A. Bayko - JMP Securities LLC, Research Division

Okay, great. That's helpful. And then I just wanted to turn to Europe quickly. What's your thinking? I know you haven't been there that long, but I think the sort of original strategy was perhaps to find a European partner. Now that commercialization in the U.S. has sort of pushed out for several years, are you thinking differently about your European strategy? Maybe you could just comment on that?

Eddie Gray

No. I don't think we've really had time to consider whether there are any implications from the FDA decision for our strategy in Europe. We do see Europe as an important opportunity. I think it may be as a function of this, that its timing and our rollout changes. We will see. And once we've fully assessed the European market, which as you know, for vaccines, is very much a market-by-market approach, then we'll make decisions as to whether to do that by ourselves or seek partners.

Operator

We have a follow-up question from Thomas Wei of Jefferies.

Thomas Wei - Jefferies & Company, Inc., Research Division

I just wanted to ask if there's a possibility that you could use European approval -- like post-approval data there? Are there post-marketing surveillance or a registry of some sort in Europe to satisfy this requirement by the FDA? Or should we really think of this as a separate stand-alone study in the U.S.?

Eddie Gray

Whilst it's true to say, Thomas, I think that any launch in Europe and the collection of data there will be valuable to the long-term understanding of HEPLISAV, we don't believe that it will be pertinent in relation to this specific question from the FDA.

Thomas Wei - Jefferies & Company, Inc., Research Division

Okay, that's helpful. And I just wanted to double-check if during your initial discussions with the agency here, were there specific safety parameters or signals that they had a special interest in having you look at? Or was it just a general look for anything that's a rare adverse event?

Eddie Gray

No. Their approach to the meeting was very much a follow-on from VRBPAC. As you will recall, VRBPAC discussed a number of issues with regard to safety. The consequence which was a desire to see a greater number of patients in the database to increase confidence overall. And our discussions with FDA were very consistent with VRBPAC.

Thomas Wei - Jefferies & Company, Inc., Research Division

And then just lastly, is this something that you think you would seek a special protocol assessment for?

Eddie Gray

I think we think that's unlikely.

Operator

I'm showing no further questions at this time. I'd like to turn the conference back over to Mr. Eddie Gray for any closing remarks.

Eddie Gray

Okay. Well I'd like to just say thank you to everybody who's joined us this morning, and for your participation in the call. I want to emphasize that we remain focused and committed as a management team here at Dynavax. Very shortly, we hope to be in a better position to estimate the time and resources necessary to satisfy the FDA requirements and to move towards HEPLISAV's approval.

I look forward to updating you on our progress, and I'd like to take this opportunity to thank you, all, for your interest and for your attention this morning. Thank you very much.

Operator

Ladies and gentlemen, this does conclude today's conference. You may now disconnect, and have a wonderful day.

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